Business people think of demand as the consumption of goods and services. At the same time, they think of supply as their production. As they see it, supply means the quantity of a product supplied at the price prevailed at the time. Economists are concerned with1 market as a whole. They want to know how much of a certain product sellers will supply at each and every possible market price. Supply may be defined as a schedule of quantities that would be offered for sale at all of the possible prices that might prevail in the market. Everyone who offers an economic product for sale is a supplier.

The law of supply states that the quantity of an economic product offered for sale varies directly with its price. If prices are high suppliers will offer greater quantities for sale. If prices are low, they will offer smaller quantities for sale. Since productivity affects both cost and supply it is important that care can be taken2 in selecting the proper materials. Productivity and cost must be kept in mind3 in order to make the best decision. It means a business must analyse the issue of costs before making its decisions. To make the decision-making process4 easier we try to divide cost into several different categories.

Fixed cost5 — the cost that a business incurs even if the plant is idle and output is zero. It makes no difference whether the business produces nothing, very little, or a lot.

Fixed costs include salaries paid to executives, interest charges on6 bonds, rent payments on leased properties7, local and state property taxes. They also take in depreciation  the gradual wear and tear on capital goods8 over time.

Variable cost9 — a cost that changes with changes in the business rate of operation or output.

Total cost10 — is the sum of the fixed and variable costs. It takes in all the costs a business faces in the course of its operations.

Marginal cost11 — the extra or additional cost incurred when a business produces one additional unit of a commodity. Since fixed costs do not change, marginal cost is the increase in variable costs, which stems from using additional factors of production. COMMENTS

1. to be concerned with smth — займатися чимось

2. ...care can be taken — ... проявити обережність

3. to keep in mind — пам’ятати

4. decision-making process — процес прийняття рішення

5. fixed cost — фіксовані витрати

6. interest charges on — процентні нарахування за ...

7. leased properties — орендна власність

8. wear and tear on capital goods — амортизація засобів виробництва

9. variable cost — змінні витрати

10. total cost — загальні витрати

11. marginal cost — додаткові витратиVOCABULARY EXERCISESI. Give the corresponding nouns to the following verbs:a) to offer, to process, to supply, to change, to demand, to care, to price, to tax, to cost, to produce, to increase, to market, to state;

b) to consume, to differ, to select, to decide, to divide, to sell, to execute, to define, to depreciate, to lease, to operate, to pay, to analyse.

II. Find equivalents:

1. consumption of goods and services

2. at the same time

3. to be concerned with smth

4. to take in depreciation

5. schedule of quantities

6. to prevail in the market

7. decision-making process

8. issue of cost

9. fixed cost

10. variable cost

11. total cost

12. marginal cost

а. процес прийняття рішення

б. загальні витрати

в. фіксовані витрати

г. додаткові витрати

д. займатися чимось

е. водночас

є. споживання товарів та послуг

ж. включати знецінення

з. тариф кількостей

и. панувати на ринку

і. поява ціни

ї. змінні витрати

III. Translate the sentences paying attention to the italicized words:

1. His parents keep him well supplied with cash. 2. Fresh vegetables are in short supply at this time of year. 3. People who offer an economic product for sale are suppliers. 4. Money supply is the total amount of money in circulation. 5. Ukraine has insufficient water supplies. 6. Planes dropped food and medical supplies to the stranded villagers. 7. Supply and demand determine prices in a market economy. 8. You promised us fuel, but can you guarantee its supply?

IV. Match each term in Column A with its definition in Column B:

Column A Column B

1. supply

a. The additional cost of producing an extra unit

of output.

2. total costs

b. Everyone who offers an economic product for sale.

3. the Law of Supply

c. Costs that increase as the number of units

produced increases.

4. variable costs

d. A table showing the quantities of a product that would be offered for sale at various prices at a given time.

5. supply schedule

e. Number of items offered for sale at each of

several prices.

6. marginal cost

f. Sellers will offer more of a product at a higher

price and less at a lower price.

7. supplier

g. Costs that remain the same regardless of

the amount of business done by the firm.

8. fixed costs

h. The sum of the fixed and variable costs.

V. Define which of the following items best completes the statement:

1. The law of supply states

a. buyers will purchase more at lower prices than at higher prices.b. sellers will produce more at higher prices and less at lower prices.

c. quantities offered for sale do not depend on price.

d. consumers buy more at high prices and less at lower prices.

2. As output increases

a. total costs fall.

b. fixed costs increase.

c. overhead costs per unit fall.

d. total variable costs fall. 3. A producer is most likely to increase the quantity of a product

supplied when

a. the consumer will pay a higher price for the product.

b. the quantity demanded decreases.

c. production costs increase.

d. there is government regulation.VI. Fill in the blanks with prepositions or adverbs if necessary:

1. Business people think ... demand as the consumption ... goods and services. 2. Economists are concerned ... market as a whole. 3. Supply means the quantity ... a product supplied ... the price prevailed ... the time. 4. Supply is defined as a schedule ... quantities that would be offered ... sale ... all ... the possible prices that might prevail ... the market. 5. The law ... supply states that the quantity ... an economic product offered ... sale varies directly ... its price. 6. ... productivity affects ... both ... cost and supply it is important that care can be taken ... selecting the proper materials.

VII. Complete the following sentences:

1. Business people think of demand ... . 2. At the same time, they think of supply ... . 3. Economists want to know ... . 4. Supply may be defined ... . 5. Everyone who offers an economic product for sale is ... . 6. The law of supply states ... . 7. If prices are high ... . 8. Since productivity affects both cost and supply ... . 9. Fixed cost is ... . It includes ... . 10. Marginal cost is ... .

VIII. Answer the following questions:

1. What do business people think of demand (supply)? 2. What does the term «supply» mean? 3. Whom do we call a supplier? 4. What does the Law of Supply state? 5. Why is it important for a business to analyse the costs? 6. What categories is the cost divided into? 7. What is fixed cost?8. What do fixed costs include? 9. What is variable cost? 10. Total cost is the sum of the fixed and variable costs, isn’t it? 11. What do you know about marginal cost?IX. Translate into English:

Bananas are typical example of perishable goods1. By «perishable» we mean goods which cannot be stored for any length of time without going bad. Most foodstuffs are in the perishable category. Such goods are offered for sale as quickly as possible, and so the supply of perishables and the stock of perishables available at any time are usually the same in quantity.

This is not true in the case of non-perishable goods like coal, steel and cars, which do not deteriorate easily. The supply of cars in the market may not be the same as the actual stock of cars in the factories.

Economists talk about the Law of Supply, in which a rise in prices tends to increase supply, while a fall in prices tends to reduce it. If prices rise for a particular commodity, the rise will of course encourage producers to make more. On the other hand, if prices fall either locally or throughout the world, producers will reduce production. This can result in serious difficulties for many producers, and may cause them to go out of business completely. Overproduction2 of any commodity can also create difficulties, because it can lead to a glut on the market, which may cause prices to fall sharply.

Supplies of many commodities can generally be adjusted to suit market conditions. This means that changes in prices lead to changes in the quantity of a particular commodity which is made available to consumers. Household goods3 and furniture belong to this category. In such instances supply is said to be «elastic», because it can be increased or decreased rapidly in response to market prices.COMMENTS

perishable/non-perishable goods; particular commodity; a rise in prices; on the other hand; overproduction; to go out of business; to reduce production; to encourage producers; to create difficulties; household goods; to lead to a glut on the market; changes in prices; to suit market conditions; market prices.II. Change the sentences according to the pattern:

Pattern:He told me something. The prices will change.

He told me that the prices would change.

1. The government anticipated something. The workers will demand higher wages. 2. The management decided something. The new factory will be located in a different city. 3. The development committee arranged something. The meetings will be held at regular intervals over the next two years. 4. They told him something. The committee will meet next week.5. The economists expected something. The prices will fluctuate considerably.

Say whether these statements are true or false and if they are

false say why:

1. Bananas are a typical example of goods that easily deteriorate. 2. Steel can be stored for a long time without losing its value. 3. The actual stock of cars in a factory is usually the same as the supply of cars available on the market. 4. According to the Law of Supply, a rise in prices tends to reduce supply. 5. If prices fall locally, production will be reduced throughout the world. 6. When there is a glut on the market, demand decreases and prices fall. 7. Changes in prices lead to a change in the quantity of a commodity.8. Supply is «elastic» because market prices rise and fall.

IV. Change the italicized verb into a noun and fill in the blanks:

1. The government encourages private enterprise. Their ___________ sometimes takes the form of financial help. 2. It is sometimes necessary to adjust the quantity of goods flowing to the market. This __________ is made according to market conditions. 3. Some economists are interested in measuring changes in the price of essential commodities. This ____________ extends over a period of years. 4. The management tried to assess the amount of money needed for the plan. The ____________ was to be made by a special committee. 5. He arranged the committee meeting. His ____________ were very efficient. 6. He decided to invest his capital in the new enterprise. His __________ might be very profitable.

V. Answer the following questions:

1. What are perishable goods? 2. What two things are usually the same in quantity? 3. What happens when the Law of Supply operates?4. What does a rise in prices encourage? 5. What does a fall in prices cause? 6. What serious effect may a fall in prices have on some producers? 7. What can overproduction lead to? 8. What happens when the supply of a commodity is adjusted to suit market conditions? 9. What kinds of goods belong to the category of commodities that can be adjusted easily? 10. What is meant by «elastic» supply?

VI. Punctuate the following passage. Provide capital letters,

commas, full stops, brackets, colons etc., where applicable:

non perishable goods such as coal steel cars and aeroplanes can be stored for considerable periods of time without loss of value this is not true however with perishables which must be placed on the market as quickly as possible if they are not sold quickly they will deteriorate if they deteriorate while in storage or in the shops both producers and distributors lose a large amount of money if there is a glut of certain perishables these commodities must be sold quickly even if the selling price is too low for a satisfactory profit READING DRILLS

In economic theory, the term «supply» denotes the amount of a commodity or service offered for sale at a given price. Just as in the case of demand, supply is determined also by factors other than price, the most important being the cost of production and the period of time allowed to supply to adjust to a change in prices. In economic analysis, these other factors are frequently assumed to be constant. This assumption enables supply and price to be related in what is called the «supply function» (with price as the independent and supply as the dependent variable) and to be graphed in the supply curve.

The supply curve is the graphical representation of the supply function, i.e., of the relationship between price and supply. It shows us how many units of a particular commodity or service would be offered for sale at various prices, assuming that all other factors (such as the cost of production, the period of time involved) remain constant. The supply curve normally slopes upwards from left to right. This indicates that, other things being equal, more is offered for sale at higher prices.

There are, however, exceptions. For example, where goods are in fixed supply, the supply curve would be a straight vertical line. Another exception is the case where a fall in prices calls forth a larger supply because suppliers fear that prices might fall still further, and where, therefore, the supply curve actually slopes downwards. If changes in the other factors are allowed, this would be reflected not in a movement along the curve, but in a shift of the whole curve. VOCABULARY EXERCISESI. Give the Ukrainian equivalents for the following words and

word-combinations. Use them in the sentences of your own:

supply; to offer for sale; a fall in prices; a change in prices; the amount of a commodity or service; at a given price; the relationship between price and supply; the cost of production; supply function; supply curve; at various prices; a particular commodity or service; at higher prices; in fixed supply; the period of time involved; the graphical representation; to slope downwards; a straight vertical line; to slope upwards.

Find in the text the terms corresponding to the following

definitions:

1. Number of items offered for sale at every price at a particular time and place. 2. The money value of a good or service. 3. The graphical representation of the supply function. 4. The relationship between price and supply.

Fill in the blanks below with the most appropriate terms from

the list:

service; the Law of Supply; a product; a commodity; the supply function; the supply curve; supply schedule; sale; a supplier; producers; price.

1. In economics, the term «supply» denotes the amount of ________ or __________ offered for sale at a given ____________ . 2. A table showing the quantities of _________ that would be offered for __________ at various prices at a given time is called _________ . 3. _________ states that the quantity of an economic product offered for sale varies directly with its price. 4. The supply curve is the graphical representation of _________ . 5. __________ normally slopes upwards from left to right. 6. Everyone who offers an economic product for sale is . 7. ________ want to sell more at a higher price and less at a lower price.

IV. Define which of the following items best completes

the statement:

A typical supply curve

a. slopes upwards from left to right.

b. slopes downwards from right to left.

c. is usually a straight line.

d. is always a curved line.

V. Complete the following sentences:

1. In economic theory, the term «supply» denotes ... . 2. Just as in the case of demand, supply is determined also by ... . 3. The supply curve is ... . 4. It shows us ... . 5. The supply curve normally slopes ... . 6. This indicates that ... . 7. Another exception is ... . 8. If changes in the other factors are allowed ... .

VI. Answer the following questions:

1. What does the term «supply» denote in economic theory? 2. What factors is supply determined by? 3. What is called «supply function»?4. What is supply curve? 5. What does the supply curve show? 6. How does the supply curve normally slope? 7. What does it indicate? 8. Are there any exceptions to supply curve?COMMUNICATIVE SITUATIONS

1. Round-table discussion. The question on the agenda is «Supply and demand determine prices in a market economy».

Questions for discussion:

«The law of demand works because consumers have the ability to substitute.The law of supply works because producers have the ability to substitute».

Fill in the blanks. Demonstrate each law with a supply-and-demand curve given below:

production costs change as output changes:

Quantityq

Fixed cost (FC)$

Variable cost (VC)$

Total cost (TC)$

0

1

2

3

4

5

6

55

55

55

55

55

55

55

0

30

55

75

105

155

225

55

85

110

130

160

210

280

The major elements of a firm’s costs are its fixed costs (which don’t vary at all when output changes) and variable costs (which increase as output increases). Total costs are equal to fixed plus variable costs: TC= FC + VC.

GRAMMAR EXERCISES

Sequence of Tenses. Direct and Indirect Speech

I. Change the following sentences as in the pattern:

Pattern:I need to talk to you.

My friend told me that he needed to talk to me.

1. I will call you tomorrow. 2. I know your cousin. 3. I’m getting hungry. 4. I can’t read your handwriting. 5. I think you speak English very well.6. Your pronunciation is very good. 7. I may be absent from class tomorrow. 8. I’m not married. 9. I have to take another English course.

II. Use Indirect Speech:

1. She said: «I like oranges better than bananas». 2. «I am going away tomorrow, mother», he said. 3. The dean said: «I want to have a word with you». 4. The boy said: «I’ll never smoke again». 5. «We’ll have enough time to finish the work», the workers said. 6. The librarian said: «There are a lot of English books in our library». 7. «Nothing grows in my garden. It never gets any sun», she said. 8. «It isn’t so foggy today as it was yesterday», I remarked. 9. «You can keep that book, if you like, John», she said. 10. «We have a lift but very often it doesn’t work», they said.

III. Translate into Ukrainian:

1. Nobody knew what he meant. 2. I wrote that I must see him. 3. They said that they were late and they were sorry. 4. She knew that George would be waiting for her. 5. I thought you were joking. 6. Galileo proved that the earth moves round the sun. 7. He said that Mary had told him that she was writing a new play. 8. She wasn’t sure that they would arrive in the evening. 9. He told his mother he was going away the next day. 10. She said that she would answer the phone.

IV. Complete the sentences in your own way:

1. One of the students remarked that ... . 2. My father often told me that ... . 3. We discussed the fact that ... . 4. Ann changed her mind when she learnt that ... . 5. I was sure that ... . 6. They said that ... . 7. We knew that ... . 8. He stressed in his report that ... .

1. Are you listening to me? 2. Do you need any help? 3. Are you going to call me tonight? 4. Does the semester end in December? 5. Have you ever been to Paris? 6. Did you enjoy your vacation? 7. Will you be at home tonight? 8. Is what you said really true? 9. Do you think it’s going to rain?

Pattern B:Where is your friend?

He (She) asked me where my friend was.

1. What time is it? 2. What are you doing? 3. How do you know that it is true? 4. Where will you be tomorrow around three o’clock? 5. Whose briefcase is that? 6. Where should I meet you after class? 7. Who do you think will win the game? 8. When does the semester end? 9. What are you going to do during vacation?

VII. Use Indirect Speech:

1. «Who put salt in my coffee?» he asked. 2. «What is your new house like?» I asked them. 3. «Where were you last night?» she asked. 4. «How far is it and how long will it take me to get there?» asked the man. 5. «Are you busy now?» he asked. 6. «Are you leaving today or tomorrow morning?» asked the secretary. 7. «Are you sorry for what you did?» the mother asked the little son. 8. «Shall I open the window?» the student asked. 9. «Do you know why he is absent?» the teacher asked. 10. «Do you understand what I mean?» he asked.

1. I could hear every word they said. 2. The buses go every 10 minutes. 3. We all write to each other regularly. 4. He enjoyed every minute of his stay. 5. Each of them phoned me to thank. 6. The police questioned everybody in the room. 7. Everyone was tired and irritable. 8. He gave each boy a present. 9. They visit us every other week.

XIII. Memorize the following proverbs. Pay attention to the pronouns each and every: 1. Each bird loves to hear himself sing. 2. Every white has its black, and every sweet its sour. 3. Everybody’s business is nobody’s business. 4. Every medal has its reverse. 5. Every man to his taste. 6. Everything is good in its season. 7. Every day is not Sunday.8. Every man has his faults.EXERCISES for individual workI. Complete the sentences with «said», «told» or «talked» and

translate them into Ukrainian: 1. John ... me that he was enjoying his new job. 2. The doctor ... thatI would have to rest for at least a week. 3. Mary ... him that she was going away the next day. 4. At the meeting the chairman ... about the problems facing the company. 5. Father ... it was a nice restaurant but I didn’t like it much. 6. Jill ... us all about her holiday in Australia. 7. Mother ... us to make a list of what we wanted. 8. The advertisement ... that if we answered all the questions correctly we might win $50. 9. She ... of applying for another job.II. Use the Past Indefinite Tense in the Principal Clause and

make the necessary changes in the Subordinate Clause: 1. The experts find the construction will cost an enormous sum. 2. He says he doesn’t even know such problems exist. 3. We are surprised to hear that your question wasn’t answered at once. 4. They write that preliminary contacts have already been established. 5. Everybody understands the new project will require a great effort. 6. We are surprised to see that nothing has been changed. 7.They suppose that the new product won’t be so expensive. 8. He is sure that he will get a credit. III. Use Indirect Speech:

a) 1. «I have something to show you», I said to her. 2. «I’ll come with you as soon as I am ready», she replied. 3. He said, «The price doesn’t include the cost of packing». 4. «I have an English lesson this afternoon and I haven’t done my homework yet», said John. 5. I said to him, «I have been waiting for you since two o’clock». 6. He said «I’m afraid I can’t go there now but I shall probably be able to go tomorrow».

b) 1. «Don’t eat too much», I advised her. 2. «Write to me as often as you can», said his wife. 3. He said to the secretary, «Bring me the letters we have received this morning». 4. The mother said to her son, «Don’t stay there long». 5. «Please don’t tell anyone what happened», Ann said to me. 6. «Please repeat these words after me», the teacher said. 7. «Don’t forget your sandwiches», said his mother. 8. «Be careful crossing roads», he said, «and remember to drive on the right».

c) 1. «You mustn’t come in without knocking», she said. 2. Notice reads: «Dogs must be kept on a lead». 3. He said: «After the lecture I have to go home quickly». 4. «Your ticket may cost five pounds», he told me. 5. His father said: «You should work harder next term». 6. «You mustn’t tell anyone what I’ve just told you», she said to me. 7. «You needn’t get up till nine tomorrow», I warned. 8. «You mustn’t play with knives, children», said their mother.

d) 1. «Are you going to see him off at the station?» I asked her. 2. «What else did you see?» I asked the boy. 3. «Have you done this sort of work before?» said his new employer. 4. «Can you tell me why Paul left the University without taking his degree?» Paul’s sister asked. 5. «How long have you been learning English?» the examiner said. 6. «How much do you think it will cost?» he said. 7. «Will you be here tomorrow?» she asked. «Yes», I answered. 8. «Shall I tell him what happened?» she asked me. IV. Put the sentences into Direct Speech with appropriate

punctuation:

1. He asked what the weather had been like during my holiday and I said that it had been awful. 2. Bill asked what country I came from. 3. I asked if I should write to Ann. 4. She asked him not to interrupt her. 5. I begged to make the coffee a bit stronger. 6. Ann said not to wait for her if she was late. 7. I asked her if she would like to borrow the book but she thanked me and said that she had already read it and hadn’t liked it very much. 8. I stopped a man in the street and asked him to help me with my car.